Everyone wants to live beautifully. A car, an apartment, modern technology, a fashionable telephone are the desire of most normal people. But not everyone has the money to buy it overnight. Therefore, people resort to services such as installments and credit. The difference between them is not known to everyone.
How is installment different from a loan?
Loans can improve the quality of life and make it more enjoyable and comfortable. They help out in a variety of situations. Loans can be commercial, consumer and car loans. Both legal entities and individuals can act as borrowers. A loan can be obtained both at the bank and at a point of sale for the purchase of goods. It is issued at interest and for various periods.
How is installment different from a loan? The main difference is that during installments there can be no overpayments for a product (service). And it is impossible to get it from the bank, as this contradicts the main activity of the credit organization.
If a bank appears in the documents, that is, a contract of sale is concluded with its participation, this is a loan.
How is installment different from a loan? Most often, installments are provided for the purchase of household appliances and vehicles. In addition, the difference between installments and credit is the timing of financing. Usually the service is provided for a short period - from 3 to 12 months. Rarely for two years. The payment of a consumer loan can be extended for 3-5 years.
Where can I get an installment plan?
Advertising offering to buy goods by installments is quite common on TVs and banners on the street. What is the difference between installment and loan?
There are two installment options. The first is when the service is a loan. In this case, the contract for the purchase of goods is concluded with the outlet, and the loan agreement is signed with the bank. In this case, the seller receives money from the bank, the buyer acquires the goods and the obligation to pay off the debt within the prescribed period, making a monthly amount. In essence, installment and credit are one and the same. The difference is that when you purchase by installments you do not overpay for the goods. And here the question arises: "When applying for an installment plan, a loan agreement is concluded that indicates the
interest rate. The amount of the monthly payment includes interest on the use of credit. How is it that the buyer does not overpay for the goods?" In order to provide the client with "0% per annum", the trade organization makes a discount on the goods, and the bank winds up this discount with its own interest. That is, all expenses are borne by the trade organization. From this it turns out that the client acquires the desired thing without any overpayments.
The second option - when the installment plan is provided by the store itself. This is the “true” installment plan, where the agreement is concluded directly with the seller himself, without any intermediaries. Interest, additional fees and commissions for this type of calculation is not provided.
The only thing you have to pay extra for is reviewing the questionnaire and filling out all the necessary documents. Stores set the cost of this service themselves and usually include it in the total installment amount.
The second difference between installments and credit when purchasing goods is the legal relationship. The contract of sale must be drawn up with the seller. And in case of any claims, it will be necessary to turn to him.
The amount of the value of the goods is paid monthly in equal installments. Most often in this case, a large part of the down payment is provided (usually at least 30%).
Who can apply for an installment plan?
Different banks have different criteria regarding who they are willing to give out a loan to. When applying for more accurate information, you should get it from the bank. Generally speaking, a person must have a job, citizenship of the Russian Federation and age from 18 to 65 years.
It is worth noting that most banks do not enter into a loan agreement with people living in regions where their branches and branches are not present. In addition, an installment plan for citizens of the Chechen Republic, the republics of Dagestan, North Ossetia and some other southern republics is possible only in the region of residence.
What documents are needed to apply for an installment plan?
The list of documents required for registration of installments depends largely on where it is drawn up. If you purchase goods in a shopping center through a loan specialist, then you will need a passport and a second document proving your identity for registration (SNILS, driver’s license or military ID).
If the contract is drawn up directly between the seller and the buyer, then in this case a passport and a sales contract will be required. It will indicate the conditions of purchase: down payment, period and amount of monthly payments. Sometimes you may need an income statement or a third party guarantee.
Installment Features
How is installment different from a loan? You can purchase in installments any product: as household appliances, furniture and fur products, as well as jewelry, and plastic windows. But most often, trade organizations set certain restrictions on installments. Stores hold promotions for which for a certain period of time it is possible to buy all goods or some limited category of goods in “credit at 0% per annum”. Therefore, most installments - this is just a marketing move to increase the amount of traffic visiting a point of sale.
Which is better: loan or installment plan?
When planning to arrange an installment plan, you must correctly assess your capabilities, as the service has both advantages and disadvantages.
So, about the benefits. Registration takes place quickly, without any strict requirements for the documents provided. When buying in installments there is no overpayment.
If we talk about the shortcomings, then this:
- Short term financing.
- Large amount of monthly payments.
Therefore, it is impossible to answer unequivocally the question of which is better: credit or installment plan. Everything is determined by your financial capabilities.
What should I pay attention to when purchasing goods by installments?
The opportunity to purchase goods by installments pleases many. Therefore, not everyone adequately assess what is happening around them. You should not immediately rush into the pool with your head, you need to take a sober look at the environment. Perhaps the cost of goods at a point of sale offering this service is significantly overstated. It is worth studying similar offers in other stores and comparing them with the cost of the goods offered in installments.